Rising Interest Rates and Lack of Fiscal Plan Increase Brazil's Recession Risk in 2027 - Folha de S.Paulo

Forecasts from the Getulio Vargas Foundation, consulting firms and banks indicate that Brazil's GDP (gross domestic product) will grow by around 1% next year, with the possibility of a recession not ruled out.

That risk increases in a scenario of rising interest rates, a stronger dollar and the absence of a fiscal plan.

For 2027, expectations of weak growth in agriculture and a slowdown in the extractive industry will reduce these sectors' contribution, leaving the economy more dependent on cyclical activities. However, conditions for sectors such as retail and services have become unfavorable.

President Lula's lack of clarity on how to tackle the country's current fiscal crisis, which orthodox economists see as the root cause of high interest rates, complicated the outlook after the presidential runoff, with the dollar surging and the stock market plunging.